Donald Luskin

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Donald Luskin is the Chief Investment Officer for Trend Macrolytics LLC, an investment consulting firm.

He also writes a blog, The Conspiracy to Keep You Poor and Stupid, which is also the title of his forthcoming book. As his blog says, his endeavor is to explain "How big government, big business, big media and big academia block your road to financial freedom—and tell you it's for your own good." He is a contributing editor to both National Review Online and SmartMoney.com[1], discussing financial, economic and political matters. Luskin's libertarianism, particularly in assailing government regulation, has made his writings popular with conservatives as well. He has published two books, Index Options and Futures: The Complete Guide^[1] and Portfolio Insurance: A Guide to Dynamic Hedging^[2]. On his blog, he states, "Attended Yale in 1973-1974; dropped out to rejoin the real world as soon as possible."

Much of the blog is spent detailing and explaining Luskin's view of how economic facts, figures, and trends are distorted by politicians, pundits and the media. He has a particular animosity towards the New York Times, especially columnist Paul Krugman, and former public editor Daniel Okrent. Eventually, Okrent used his Times "farewell" column to accuse Krugman of "shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults"—without citing specifics. In a very public battle, Krugman rebutted Okrent's parting shot.[2] Luskin has similarly pressured Okrent's successor, Byron Calame, insisting that the Times make official corrections regarding its columnists' purported errors.[3]

In August 1999, at the top of the tech bubble, Luskin and partner Dave Nadig (himself subject of a book by James Morton: Investing with the Young Guns) started the MetaMarkets Open Fund, the first mutual fund to publish trades and list its holdings in real-time via its website. This "transparency" and "openness," Luskin and Nadig said, was a step forward in the financial world, equivalent to the political revolutions and international democratic transformations of the 90s, because leveling the playing field for the average investor and overthrowing "financial elites" everywhere. In particular, Luskin was dismissive of naysayers who talked of bubbles and P/E ratios, contending the world was entering an unprecedented era of innovation and prosperity, and that the market boom had only begun. (Note regarding last sentence: no citations offered.) The model was dismissed by some analysts as being a "gimmick," having nothing to do with investing per se: "They brought chat boards to life in a mutual fund."[4]

At its peak, MetaMarkets received 16 million dollars in investments, and Luskin's biggest bets included companies like MCI WorldCom and Lucent Technologies. However, Open Fund lost more than 75% of its value before it was liquidated in the summer of 2001. Luskin explained his fund's failure by saying, "The funds are a casualty of the economy. We've been through the worst bear market in 50 years, maybe 100 years."[5]

Luskin is the de facto leader of the Krugman Truth Squad, a group of National Review Online writers, and some bloggers, who are dedicated to detailing and rebutting what they consider Paul Krugman's lies and distortions. In 2003, Krugman accused Luskin of personally stalking him. Luskin defended himself against the charge. The issue about whether Krugman had been stalked by Luskin became controversial: The New Yorker published interviews with both men on the issue.

Critics argue that Luskin knows very little about economics and makes frequent errors. Many of Luskin's supporters counter that academic economists have lost sight of the real world and/or are blinded by punditry. Angry Bear is one blog that is often critical of Luskin (and other supply-siders like Larry Kudlow). On his own blog, Berkeley economics professor Brad DeLong publishes an "Intellectual Garbage Pickup" every quarter with errors he finds in Luskin's work, and in January 2005 he called Luskin "The Stupidest Man Alive." [6] Some believed that Luskin responded by quoting DeLong on his blog's sidebar: in an interview[7], DeLong answered the question "What has been your worst blogging experience?" with the terse "Donald Luskin." Actually, Luskin had put up the quote in January 2004, shortly after the interview was published. The feud between the two began in early 2003.

[edit] Quotes

"Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation—and show you how to fight back!"—description of his weblog

"Fig-leaf Dan—available in one handy stretch-to-fit size."—An insult to Daniel Okrent, public editor of the New York Times. Luskin believes Okrent did a poor job of hiding liberal bias in the New York Times.